The new version of the Fateh 110, which means “conqueror” in Farsi, has increased accuracy and a range of 300 km., the Fars News Agency quoted Vahidi as saying.

He emphasized that the solid-fuel surface-to-surface missile was developed domestically by Iran’s Aerospace Industries Organization.

The new version increases the weapon’s range, Vahidi said. Earlier versions of the missile have a range of around 200 km. and can carry a 250-kg. warhead.

“With the fourth-generation of the Fateh 110, the armed forces of our country are able to target and destroy land and sea targets, enemy headquarters... missile seats, ammunition sites, radars and other points,” Vahidi said, according to the Islamic Republic News Agency.

“Using new guidance methods, target-striking systems were installed on the missiles and during the flight test... its ability to hit the target without deviation was proven,” he said. “In future programs all missiles built by the Defense Ministry will be equipped with this capability.”

The range of 300 km. means the Fateh 110 could strike Iran’s immediate neighbors and might also be able to hit shipping in the Strait of Hormuz, as well as energy facilities in Saudi Arabia and the US Fifth Fleet based in Bahrain.

Such moves would risk a military response from the United States.

“The test firing of the missile is most likely to be a warning to the West and Iran’s Persian Gulf neighbors that Iran too can escalate the level of tensions in the Persian Gulf area,” said Meir Javedanfar, Iran expert at the Interdisciplinary Center Herzliya.

Bruno Gruselle, senior research fellow at the Foundation for Strategic Research in Paris, said any improvements in the accuracy of Iran's short-range missiles might be a precursor to better long-range ones.

“Fateh is a very shortrange guided rocket and a good platform to test improved guidance,” he said. “They will have to take that to longer-range systems which have very different mechanical constraints during their flight, but they will obviously work on that.”

Vahidi said the missile was intended as a defensive weapon. “These capabilities are defensive and would only be used against aggressors and those who threaten the country’s interests and territorial integrity,” he said.

Hezbollah has hundreds of M600 missiles, which are copies of the Fateh 110.

Hezbollah is believed to be storing the M600 in homes throughout southern and central Lebanon.

The Iranian defense minister’s announcement came amid increased speculation in recent weeks that Israel may launch a strike on Iran’s nuclear facilities soon.

Prime Minister Binyamin Netanyahu said on Wednesday that US-led sanctions and diplomatic efforts have had no impact on the Iranian nuclear program, and warned that time is running out to peacefully resolve the issue.

Iran has made “robust strides” in developing its ballistic missile capabilities, the London-based International Institute for Strategic Studies wrote in a 2010 assessment that also said Iran’s arsenal suffered from poor accuracy.

All of Tehran’s ballistic missiles would be capable of carrying a nuclear payload, the IISS said.

Last month, Iran said it had successfully test-fired medium-range missiles capable of hitting Israel, and tested dozens of missiles aimed at simulated air bases.

It conducted what it called the Great Prophet 7 missile exercises at the start of July as a European Union embargo on Iranian crude oil took full effect.